S&P 500 Emini Day Trading Gap Monday November 30, 2009

S&P Emini 500 Futures opened what was supposed to be a day of light trading and low volatility with a huge 30 point gap down.  This market reaction on the post holiday session shows that traders are skittish.  Monday should be an interesting day as institutional traders digest the news from Dubai.  The markets do not typically react well to uncertainty.  Just who has exposure to the Dubai weakness will determine how and if the news will affect the financial markets.  The volume today nearly equaled a full day’s trading at 1.7 million contracts, even though the markets closed early at 1:00 pm.  The day’s range, 20.5 points was well above the 14 day average true range of 17.4 points.  Despite the short term sell off, the monthly candlestick remains above an up trend line drawn from the March low, and the weekly chart shows the second doji in a row at the week’ close.  Short term concerns aside, the Emini Futures are still in a longer term up trend with indications of weakness on news.  On the weekly chart, the market is overbought and in the decision mode.  The coming week should give us a good indication of whether the up trend continues or the market will correct.  For tomorrow, look at pre market activity for a hint as to the day’s direction.  Pre market volume at or above the 250-300 thousand contract range indicates the possibility of high volatility.